chris_183 said:
...about the possible union of LQG and string theory. In other words, that string theory and LQG can possibly be reformulated into a single TOE...
that's a good question. I hope you keep asking it, and that you UPDATE your information about current research.
Nonstring Quantum Gravity is a very rapidly changing field and is no longer dominated by what used to be called LQG.
For example the spinfoam approach Rovelli is working with is not about loops at all, it really is not proper to call it LQG although out of laziness we do.
The approach called CDT (causal dynamical triangulations) is not much like LQG and it is getting a lot of attention.
then on the string side there is something called NONCRITICAL string which can involve abandoning the extra dimensions so you can get back to a more familiar 3D or 4D world.
Noncritical string has been around for a long time and it might be stimulated by a MERGER.
This is a long way round of saying that there was just a paper that appeared proposing a
merger of CDT with a noncritical string model of an unusual sort.
The paper was by Ambjorn, Loll, Watabiki, Westra, and Zohren. the curious thing was that in the string model there was only one string, and it was the whole world. The worldsheet of this one string was the 4D spacetime itself. I hope someone who has read the paper will correct me if I am wrong. It sounds highly bizarre, and not like usual string stuff either.
So I guess this illustrates that if there is some cross-fertilization between the competing research lines it is apt to happen in
ways you don't expect. It won't necessarily happen in ways envisioned by Lee Smolin back in 2001 when he wrote that book you mentioned! On the other hand Smolin has a far-reaching vision and has been prophetic in the past (he began dealing with the String Landscape problem back in the early 1990s and it didn't hit the mainstream string community until ten years later.) He has been right sometimes, but there's no guarantee he will be in the future.
There were also some other papers by
John Baez et al that were stringy in a sense, but without the extra dimensions. the strings didn't vibrate, it was their topology that was interesting---braids were involved. Someone on Rovelli's team worked on that with Baez. That was last year. It looked like signs of a merger between the spinfoam approach that Baez helped invent and a very nonstandard sort of string that folks might not even recognize as such.
Anyway this kind of thing HAPPENS and if you are curious enough to try the technical papers I can get you links to the Baez et al and also that other one. In fact there are THREE recent ones by Ambjorn, Loll, Watabiki, Westra, Zohren

1.
http://arxiv.org/abs/0804.0252 [ps, pdf, other]
Title:
A Matrix Model for 2D Quantum Gravity defined by Causal Dynamical Triangulations
Authors: J. Ambjorn, R. Loll, Y. Watabiki, W. Westra, S. Zohren
Comments: 13 pages, 1 figure
Subjects: High Energy Physics - Theory (hep-th); General Relativity and Quantum Cosmology (gr-qc)
2.
http://arxiv.org/abs/0802.0896 [ps, pdf, other]
Title: Topology change in causal quantum gravity
Authors: J. Ambjorn, R. Loll, Y. Watabiki, W. Westra, S. Zohren
Comments: 4 pages, proceedings of the workshop JGRG 17 (Nagoya, Japan, December 2007)
Subjects: High Energy Physics - Theory (hep-th)
3.
http://arxiv.org/abs/0802.0719 [ps, pdf, other]
Title:
A String Field Theory based on Causal Dynamical Triangulations
Authors: J. Ambjorn, R. Loll, Y. Watabiki, W. Westra, S. Zohren
Comments: 29 pages, 4 figures
Subjects: High Energy Physics - Theory (hep-th)
I've highlighted two which seem to have merger implications.
Bear in mind that nothing is settled. Nonstring QG is a rapidly shifting research field.